Value of a South Carolinian's life: State senate debate pits victims against taxpayers

Three years after a transit authority bus driver hit and killed Willie McNeil as he pushed a bike along a rural Pee Dee road, Rock Hill attorney Robert Phillips persuaded a Darlington County jury to award McNeil’s grieving mother $1 million.

But as soon as the jury had left the courtroom, a state judge — following a S.C. law that limits government payouts in lawsuits — slashed the verdict by $700,000.

“The jury left that courtroom, shook my hand and felt good that this woman’s son should not have died, but that we are going to legally compensate this woman for the loss of her son,” Phillips said of the 2008 case. “The jury left that courtroom thinking they had done their civic duty.”

The case is among hundreds in recent history where lawsuits against state agencies and local governments have been limited by South Carolina’s $300,000-a-victim cap on government liability. That cap — which also limits group claims to a total of $600,000 — hasn’t been changed in more than 20 years.

But this year, there is new momentum in the General Assembly to raise those caps, criticized as too low to compensate South Carolinians who are injured or killed at the hands of their government.

State senators have debated the idea for more than 10 hours in committees already but have reached only a limited consensus on how to raise the caps.

Emergency personnel tend to victims after a children’s train wrecked at Cleveland Park in Spartanburg on March 19, 2018.(Photo11: Tim Kimzey/Tim.Kimzey@SHJ.com)

A bill that would more than triple the cap on government payouts — to $1 million for a single victim or $2 million for a group of victims — has reached the Senate floor and awaits debate. But a number of senators are concerned the increase that will cause insurance premiums to soar for state and local agencies, leading them to raise taxes or cut services to pay for them.

The debate pits victims against taxpayers, splits the Senate mostly along party lines and divides senators who make money suing the government against their colleagues who defend those government agencies in court.

“I’m not looking for consensus from the audience,” said state Sen. Gerald Malloy, the Darlington Democrat sponsoring the bill, when told local governments oppose the bill. “I’m looking for good policy for our state.”

‘Woefully inadequate’

Until the mid-1980s, South Carolina and other states enjoyed immunity from civil lawsuits, a privilege stemming from common law in England, where the king’s actions were legal by definition.

That changed with the 1986 S.C. Tort Claims Act. But rather than strike down the state’s immunity entirely — as some other states have done — S.C. lawmakers enacted limits to the state’s legal liability, hoping to strike a balance between making victims whole and burdening government — and its taxpayers — with higher costs.

Today, that means a South Carolinian harmed by the government can sue for up to $300,000. A group of people hurt in the same incident, regardless of size, can sue only for $600,000 to share amongst themselves.

There are exceptions for civil rights cases, such as when the City of North Charleston reached a $6.5 million settlement with the family of Walter Scott, an unarmed black man slain by a white police officer in April 2015.

But in many other cases, trial attorneys say they can’t win enough money to cover victims’ rising medical bills or reimburse families for their losses.

The hypotheticals are endless: An aging school bus, filled with children, catches on fire. A pothole neglected for months by transportation officials causes a fatal wreck. A police officer speeding to a scene runs a red light and t-bones a car filled with passengers.

One incident driving momentum behind Malloy’s bill is the March 2011 miniature train wreck at a Spartanburg County park that injured 28 people, mostly children, and killed a 6-year-old boy.

That accident, blamed on excessive speed, sent children to the hospital with bruises, broken bones and brain injuries. One child needed at least 10 surgeries to repair a leg that was nearly severed when the train derailed and tumbled down a rocky embankment.

The county employee driving the train admitted he was going too fast, and a state inspector admitted he had falsified a report saying he had tested the train for safety. In reality, the train’s battery was dead on the day that the inspector said he had done his review.

By arguing multiple incidents of negligence by several government agencies led to the accident, attorney Thomas Killoren managed to get past the $300,000 cap to negotiate a $1.6 million settlement for the victims’ families.

But that verdict was highly unusual, Killoren said, adding even the higher amount hasn’t been enough to address the hundreds of thousands of dollars in medical bills that some families incurred. Also, efforts in the State House to create a separate fund for the victims failed.

“It was woefully inadequate,” Killoren said.

Making matters worse, trial lawyers say, attorneys defending the government in these cases often lowball their settlement offers to victims’ families, knowing their losses are limited if they lose a case in court.

Last June, for example, the family of a North Greenville firefighter who was hit and killed during a high-speed chase settled its lawsuit against the Greenville County Sheriff’s Office for $225,000. And $92,000 of that went to attorney fees.

A similar case could have resulted in an award of anywhere from $5 million to $10 million had the defendant not been a government agency, said Rock Hill attorney Phillips, the family’s attorney.

Hundreds of payouts

Over the past 10 years, the state Insurance Reserve Fund — which insures state agencies and a majority of the state’s 46 counties — made nearly 200 payouts of more than $200,000 to a single victim, hitting or nearly reaching the $300,000 cap.

Over the same span, the agency paid out at least $400,000 to groups of people in 72 separate cases.

Last year, the Reserve Fund paid out more than $66.7 million in claims and nearly $24 million in legal fees, the agency told senators.

Supporters of lifting the cap say limiting the state’s legal liability also limits an agency’s incentive to avoid negligence. Trial lawyers regularly decline to pursue suits against the government because the money doesn’t justify their time and effort, according to House Minority Rep. Todd Rutherford, a Columbia Democrat and trial lawyer.

“The government should not be allowed to kill people cheaply,” he said.

‘Problem creator’

On that, most everyone agrees.

But the consensus in the Senate breaks down when the discussion begins on how high to raise the cap and other crucial details, such as whether to tie future increases to inflation.

Some, including plaintiffs’ attorneys, have suggested the caps be lifted entirely. Others prefer a smaller hike than Malloy has offered.

Malloy’s bill would bring South Carolina’s cap in line with neighboring Georgia and North Carolina. But some senators say tripling the payout cap in one year creates a huge unfunded mandate for local governments and school district with little cash to spare.

An estimated 50-percent insurance premium hike could cost a small county $500,000 next year, according to Josh Rhodes, an attorney at the S.C. Association of Counties. Counties will have to pay for those higher insurance costs by raising taxes or cutting services, starting with arts and festivals but then moving on to non-essential jobs like solid-waste disposal, Rhodes said.

“This isn’t a problem solver,” Rhodes said of Malloy’s proposal. “This is a problem creator.”

S.C. cities and towns face a similar dilemma. For instance, a city like Anderson, with more than 27,000 residents, could see its insurance premiums rise about $100,000 — enough to hire or cut two full-time employees — according to Tiger Wells, government affairs director at the Municipal Association of South Carolina.

State Sen. Mike Fanning of Fairfield County, a rare Democrat opposed to the proposal, said tripling the caps in a single year could force a school district to keep a shoddy, dangerous bus on the road, endangering more lives.

“This is supposed to be the year of education in South Carolina,” said Fanning, a lifelong educator. “We pass this, and we’re liars.”

Senate Majority Leader Shane Massey and state Sen. Sandy Senn — Republican attorneys who have represented government agencies in liability cases — say they also have concerns with the bill in its current form. They are among a handful of senators formally objecting to the bill to delay a Senate debate until a compromise can be reached.

Both agree the cap should be raised.

But Massey has proposed lifting it to $500,000 per victim and $1 million per incident — half the current proposal — and cutting the part of the bill that would let the cap rise or fall each year with the Consumer Price Index.

Tying the cap to inflation is important, some senators argued, to ensure the law keeps up with rising health care and prescription costs that victims will incur.

“It’s about taking care of constituents,” said state Sen. Margie Bright Matthews, a Colleton Democrat and attorney who has represented both government agencies and citizens suing them.

But Massey argued tying the cap to inflation essentially “puts in state statute an automatic tax increase for the taxpayers every year.”

State Sen. Dick Harpootlian, a Columbia Democrat and trial lawyer, is skeptical insurance premiums will have to soar if the cap rises.

Instead, he says the Insurance Reserve Fund should re-examine its policy of charging a flat rate to the agencies it covers. The agency could save money by charging a lower rate to a sheriff’s department that has received no complaints than a sheriff’s department with a penchant for police brutality, the former prosecutor said.

“I was astounded to hear the IRF doesn’t operate like an insurance company,” Harpootlian said. “There ought to be a separate look at the IRF.”

A Senate Judiciary Committee hearing on the bill Tuesday showcased an array of concerns, leading credence to the popular State House saying that the 46-member Senate, typically, has 46 different ideas on how to solve any problem.

The bill’s sponsor, Malloy, regularly defended his bill as imperfect, yet a step in the right direction. As Republicans raised concerns about taxpayers, he emphasized the plight of victims killed or relegated to a wheelchair by the government’s negligence, saying they will end up as burdens on taxpayers when the money from their lawsuits runs out.

“We can point to a lot of situations where folks were not made whole again,” he said.